STRENGTH IN NUMBERS BLOG

February

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Budget summary 2018

The following are details of the Budget Statement of 10 October 2017, as made by the Minister for Finance and Public Expenditure and Reform.

Income Tax

The tax credits and tax bands changes are in bold.

Tax Credits

Tax Credit

2017 €

2018 €

Single Person

1,650

1,650

Married or in a Civil Partnership

3,300

3,300

Employee Tax Credit

1,650

1,650

Earned Income Tax Credit Max

950

1,150

Widowed Person or Surviving Civil Partner (without qualifying child)

2,190

2,190

Single Person Child Carer Tax Credit

1,650

1,650

Incapacitated Child Credit Max

3,300

3,300

Blind Tax Credit:

Single Person

1,650

1,650

Married or in a Civil Partnership - One Spouse or Civil Partner Blind

1,650

1,650

Married or in a Civil Partnership - Both Spouses or Civil Partners Blind

3,300

3,300

Widowed Parent:

Bereaved in 2017

-

3,600

Bereaved in 2016

3,600

3,150

Bereaved in 2015

3,150

2,700

Bereaved in 2014

2,700

2,250

Bereaved in 2013

2,250

1,800

Bereaved in 2012

1,800

-

Age Tax Credit:

Single or Widowed or Surviving

Civil Partner

245

245

Married or in a Civil Partnership

490

490

Dependent Relative

70

70

Home Carer Tax Credit

1,100

1,200

Tax Rates and Tax Bands

Personal Circumstances

2017 €

2018 €

Single or Widowed or Surviving Civil Partner, without qualifying child

33,800 @ 20%Balance @ 40%

34,550 @ 20%Balance @ 40%

Single or Widowed or Surviving Civil Partner, qualifying for Single Person Child Carer Credit

37,800 @ 20%Balance @ 40%

38,550 @ 20%Balance @ 40%

Married or in a Civil Partnership, one Spouse or Civil Partner with Income

42,800 @ 20%Balance @ 40%

43,550 @ 20%Balance @ 40%

Married or in a Civil Partnership, both Spouses or Civil Partners with Income

42,800 @ 20%with increase of24,800 max.Balance @ 40%

43,550 @ 20%with increase of25,550 max.Balance @ 40%

Exemption Limits

The exemption limits for persons aged 65 years and over remain unchanged:

Personal Circumstances

2017 €

2018 €

Single or Widowed or a Surviving Civil Partner, 65 years of age & over

18,000

18,000

Married or in a Civil Partnership, 65 years of age & over

36,000

36,000

The above exemption limits are increased by €575 for each of the first two dependent children and by €830 for the third and subsequent children.

Marginal Relief may apply, subject to an income limit of twice the relevant exemption limit.

Mortgage Interest Relief

Relief is extended to existing recipients for a further three years on a tapered basis. Qualifying interest applies for each of the three years at the following rates:

2017

2018

2019

2020

Qualifying Interest

100%

75%

50%

25%

The interest ceilings are also reduced for each of the three years as follows:

First time buyers

2017 €

2018 €

2019 €

2020 €

Single (unmarried or not in a civil partnership)

10,000

7,500

5,000

2,500

Married, in a civil partnership, widowed, or a surviving civil partner

20,000

15,000

10,000

5,000

Non-first time buyers

2017 €

2018 €

2019 €

2020 €

Single (unmarried or not in a civil partnership)

3,000

2,250

1,500

750

Married, in a civil partnership, widowed, or a surviving civil partner

6,000

4,500

3,000

1,500

No relief will be available from 1 January 2021.

Key Employee Engagement Programme (KEEP)

A new share option scheme will be introduced for employees of unquoted Small and Medium Enterprises with effect from 1 January 2018, subject to EU approval.

Under this new scheme, any gain realised on the exercise of a qualifying share option, granted in the period 1 January 2018 to 31 December 2023, will be exempt from Income Tax, USC and PRSI, provided certain conditions are met.

Any gain on the subsequent disposal of the shares acquired under KEEP will be subject to Capital Gains Tax (CGT) in the normal way.

Pre-letting Expenses – Rented Residential Property

A new deduction is being introduced for pre-letting expenses of a revenue nature incurred on a property that has been vacant for a period of 12 months or more. The expenditure must be incurred within the 12 month period before it is let as a rented residential premises.

A cap on allowable expenses of €5,000 per property will apply, and the relief will be subject to clawback if the property is withdrawn from the rental market within four years. The relief will be available for qualifying expenses incurred up to the end of 2021.

Universal Social Charge (USC)

The USC changes are in bold.

Standard Rates of USC

USC Thresholds

2017

Rate

2018

Rate

Income up to €12,012.00

0.5%

Income up to €12,012.00

0.5%

Income from €12,012.01 to €18,772.00

2.5%

Income from €12,012.01 to €19,372.00

2%

Income from €18,772.01 to €70,044.00

5%

Income from €19,372.01 to €70,044.00

4.75%

Income above €70,044.00

8%

Income above €70,044.00

8%

Reduced Rates of USC

USC Thresholds

Individuals aged 70 years or over whose aggregate income for the year is €60,000 or less.

Individuals (aged under 70) who hold a full medical card whose aggregate income for the year is €60,000 or less.

2017

Rate

2018

Rate

Income up to €12,012.00

0.5%

Income up to €12,012.00

0.5%

Income above €12,012.00

2.5%

Income above €12,012.00

2%

Note 1. ‘Aggregate’ income for USC purposes does not include payments from the Dept. of Employment Affairs and Social Protection.

Note 2. A ‘GP only’ card is not considered a full medical card for USC purposes.

Exempt Categories

These remain unchanged:

2017

2018

Where an individual’s income for a year does not exceed €13,000

Where an individual’s income for a year does not exceed €13,000

All Dept. of Employment Affairs and Social Protection payments Income already subjected to DIRT

All Dept. of Employment Affairs and Social Protection payments Income already subjected to DIRT

3% Surcharge (non-PAYE income)The surcharge of 3% on individuals who have non-PAYE income that exceeds €100,000 in a year remains unchanged.

Value Added Tax (VAT)

Sunbed ServicesThe VAT rate on sunbed services will be increased from 13.5% to 23% with effect from 1 January 2018.

CharitiesA compensation scheme is being introduced for charities which are unable to reclaim VAT on inputs. A capped amount will apply to the scheme, with pro-rata payments made where the amount claimed exceeds the amount available. Details of the scheme will be made available when complete.

Capital Gains Tax (CGT)

CGT property incentive for land and buildings held for minimum period of seven years An amendment will be made to section 604A of the Taxes Consolidation Act 1997, which relates to the CGT relief for gains in respect of land and buildings that are held for a minimum period of seven years. The amendment will provide that gains in respect of land or buildings that were acquired between 7 December 2011 and 31 December 2014 will be exempt from CGT if they are sold after four years and within seven years from the date they were acquired.

Capital Acquisitions Tax (CAT) / CGT

Leasing of agricultural land for solar energy production - CAT agricultural relief and CGT retirement reliefAmendments will be made to CAT agricultural relief and CGT retirement relief so that the leasing of agricultural land for the production of solar energy will not affect entitlement to the reliefs, where the area of the land which is leased for that purpose does not exceed 50% ofthe total area of the land concerned.

Details will be included in the Finance Bill.

Corporation Tax (CT)

Accelerated capital allowances for energy-efficient equipmentThe accelerated capital allowances scheme for energy-efficient equipment is being extended for a further three years until 31 December 2020.

Capital allowances for intangible assetsFollowing the recommendation of Mr Seamus Coffey in his Review of Ireland’s CT Code, a cap of 80% will apply in respect of the amount of capital allowances for an intangible asset, and any related interest expense, that may be deducted from relevant trading income arising from the intangible asset in an accounting period. The cap applies in respect of expenditure incurred on intangible assets on or after 11 October 2017.

Details will be included in the Finance Bill.

Excise

Sugar Sweetened Drinks Tax (SSDT)The SSDT will be introduced, subject to formal approval by the European Commission, in April 2018. It will apply to first supplies in the State of water and juice based drinks with added sugar and a total sugar content of 5g or more per 100 millilitres.

Sugar content (per 100 millilitres)

Rate

between 5g and 8g

20 cent per litre

8g or more

30 cent per litre

Drinks supplied in concentrated form will be assessed on the basis of the sugar content of the drink at the dilution level intended for consumption.

Tobacco Products Tax (TPT)TPT rates are increased with effect from 11 October 2017. The increase amounts to 50 cent, inclusive of VAT, on a packet of 20 cigarettes in the most popular price category, with pro rata increases on other tobacco products. An additional 25 cent inclusive of VAT is being added to the price of 30g packets of Roll Your Own (RYO) tobacco.

Alcohol Products Tax (APT)There are no changes to the APT rates.

Mineral Oil Tax (MOT)There are no changes to the MOT rates.

* Stamp Duty

Transfer or conveyances of non-residential propertyThe stamp duty on the purchase or transfer of non-residential property (including land) is increased from 2% to 6%. The new rate takes effect for conveyances or transfers of such property that are executed on or after 11 October 2017. Stamp duty is payable by the purchaser.

Transitional arrangements for signed contracts will apply with details to be included in the Finance Bill.

A stamp duty refund scheme will be introduced in relation to commercial land purchased for the development of housing. Developers will need to have commenced the relevant development within 30 months of the land purchase to qualify for the refund.

Leases of non-residential propertyThe rate of stamp duty charged on the premium component is increased from 2% to 6%. A premium is an additional amount (usually payable in a lump sum) that may or may not be payable in addition to the rent. There is no change in the rates of stamp duty on the rent component of a lease. The new rate takes effect for leases that are executed on or after 11 October 2017.

Transitional arrangements for signed contracts will apply with details to be included in the Finance Bill.

Consanguinity relief and agricultural propertyThe consanguinity rate of stamp duty was due to expire on 31 December 2017 but is to be extended for another three years. Conveyances or transfers of agricultural property between certain blood relatives (subject to certain conditions) on or after 11 October 2017 will be charged at 1% of the consideration instead of being set at half the rate of stamp duty that applies to non-residential property. This means that the amount of stamp duty payable will remain unchanged.

Vehicle Registration Tax (VRT)

There are no changes to VRT.

Benefit in Kind

Electric Cars and VansFrom 1 January 2018 to 31 December 2018, where an employer provides an employee or director with an electric car or van, no taxable benefit will arise for the employee or director.

This exemption is limited to cars or vans which derive their motive power solely from electricity (no exemption is available in respect of hybrid cars or vans).

Charging points for Electric VehiclesThe provision of charging points on site by an employer for the electric charging of vehicles will not give rise to a taxable benefit for the employee or director from 1 January 2018.

Legal DisclaimerThis leaflet is intended to describe the subject in general terms. As such, it does not attempt to cover every issue which may arise in relation to the subject. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published herein.